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Bottom Line Up Front

  • A savings account is a great place to start saving for short-term goals or an emergency fund. Consider a Money Market Savings Account as your savings builds.
  • For longer-term savings goals or goals with a deadline (such as a vacation), a certificate is a good option as it typically earns more dividends than a standard savings account.
  • For retirement savings, IRAs offer tax benefits when certain requirements are met.  

From basic savings to certificates and individual retirement arrangements (IRAs), understanding the benefits of different savings accounts can help set you up for success. Here’s a rundown of the options you may want to consider.

Short-Term Savings

A basic savings account is a safe place to keep your money. You can access your funds anytime with no penalty, and your money is insured by the U.S. government for up to $250,000 per financial institution.* This is a great place to set up an emergency fund for unexpected expenses. Our calculator can help you decide how much you should set aside.

If your short-term savings exceeds $2,500, consider a Money Market Savings Account (MMSA). You’ll enjoy all the same benefits as a basic savings account while taking advantage of higher dividends.

Saving for Specific Goals or the Long Term

Once you have enough money put away for emergencies, consider a certificate, which can be a good option for the longer term or for savings goals with a specific deadline like a down payment on a car or vacation. With this type of plan, you’ll typically earn more dividends because you agree not to touch your account balance for a specific amount of time. (Navy Federal Credit Union offers certificates with terms ranging from 3 months to 7 years.)

If you need to access your money earlier than planned, you may have to pay a penalty and you’ll likely forfeit a certain amount in dividends.

Retirement Savings

When it comes to saving for retirement outside of a brokerage account or employer-sponsored plan, an IRA savings plan is a great option. IRAs offer tax advantages that make it easier for your money to grow over the long term.

You can think of an IRA savings plan as a container. Within that container, you can hold different types of savings accounts. Navy Federal Credit Union offers 3 types of savings accounts for IRAs:

  1. An IRA Savings Account enables you to earn guaranteed dividends while enjoying all the tax benefits of an IRA.
  2. An IRA Money Market Savings Account offers all the perks of an IRA Savings Account while enabling you to earn more with higher dividend rates with a balance of $2,500 or more.
  3. An IRA Certificate enables you to earn guaranteed returns at a higher dividend rate than a savings or money market account for a defined term period that you choose while benefiting from all the tax benefits of an IRA.

Create Your Savings Plan

As you build your savings, you’ll likely find that having different accounts for different goals makes the most sense. At Navy Federal Credit Union, we’re ready to help. Explore your savings account options or retirement savings options to determine what works best for your financial needs.

*NCUA insurance is up to $250,000 per account ownership category.

This article is intended to provide general information and shouldn't be considered legal, tax or financial advice. It's always a good idea to consult a tax or financial advisor for specific information on how certain laws apply to your situation and about your individual financial situation.